Are you throwing your net worth into the wind?

Mitt Romney wants you to ask yourself whether you are better off now than you were four years ago. Obviously, he is trying to get elected, but it is a good question. Not simply because president Obama has been the steward of a failing economy, but as a way to see if you are one of the millions that wastes large amounts of money each year. To find out, here are ten common ways that Americans throw their net worth to the wind.

10 Ways consumers piddle away their net worth

• Banks raked in $7 billion in ATM fees last year. Surely, you can find an in-network ATM. Another suggestion is to shop around for a bank or credit union that will waive or reimburse ATM fees in exchange for a direct deposit or other consideration from you.
• Collectively, Americans spend an average of $12 billion on traffic fines each year. Do you really need to give the government more money than they already collect from your paycheck?
• Do you feel lucky? $31 billion went to lottery sales in 2010.
• $29 billion went to candy makers. Look for more creative ways to say you are sorry and healthier ways to snack.
• $44 billion was spent on tobacco products. That amount does not include the health care costs associated with tobacco use.
• $50 billion was spent on booze. Again, this does not include the costs of a DUI or health issues from drinking excessively.
• $49 billion was wasted in credit card interest last year alone.
• Didn't get enough of the hose on a lottery ticket? Americans spent $125 billion at casinos last year. No wonder they comp so many rooms.
• A total of $146 billion went into the wind in the form of wasted energy. You can find plenty of suggestions on how to reverse that trend at energystar.gov.
• On average, Americans throw $165 billion in food into the trash each year. For many it is the habit of buying on impulse that leads to having food expire at home. Writing a list, never shopping hungry, and using coupons are all easy ways to lower the amount of food that you throw away each week.

Even if you do not stop your bad habits, maybe you can cut back on them. After all, we all have a vice, but curbing it could save you hundreds, if not thousands, each year. Get control of your habits, then ask yourself if you are better off than you were four years ago.

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Why pathological wealth addiction causes excessive income disparity

When wealth becomes an addiction it has social consequences. In 'The Psychology of Money', authors Adrian Furnham and Michael Argyle describe a term called 'Money Sanity'. In testing of subjects, research aimed to assess how different types of behaviors associated with money influence money sanity. A question discussed in the book is whether or not emotional issues become expressed through attitudes about money. This is a question also discussed by Eric J. Dammann Phd in Fortune magazine.

PD-US

According to the Fortune magazine publication, money is associated with psychological beliefs about what it can do.  For example, some believe money gives one control and others equate money with higher self-esteem. Moreover, Dammann states irrationality and learned behaviors can influence how money is used and the affects of channeling non-financial logic via money. On a mass scale, the suggestion is pandemic mis-management of money, potentially regardless of social class.

If the above psychological researchers are correct in their assessments, there is a notable possibility of emotional transference of individual psychology on to the use of and beliefs about money. Consequently, this could lead to excessive income disparity via money pathology or simply psychologically unhealthy money management. Since those with the most money are not immune from these psychological concerns, it would make sense to state the same issue in wealthy people would have a larger affect since their portion of total wealth is higher. 

To illustrate how pathological wealth addiction can cause income disparity suppose Person A makes $2.5 million per year and Person B makes $40,000 per year. Each have the same emotional issue and believe how much money they have in contrast to others primarily defines who they are as individuals. This belief transferred to money management could lead to behaviors such as hoarding money that's affect would be greater for the higher income individual. On a national scale, mass psychology of money management behavior could actually encourage income disparity to reinforce misconceptions about what wealth can do. 

How to Read Federal Reserve Reports to Guide Your Investment Decisions

Federal Reserve reports and research can guide investment decisions by providing useful economic data reflective of business, market , commercial and economic conditions. The U.S. Federal Reserve Bank or FED for short is the semi-private national central bank of the United States that both gathers and releases economic data. This data can be found at the Federal Reserve website, and the websites of the Federal Reserve Regional Banks.

Federal Reserve reports include a variety of financial and economic information related to the banking industry, the economy as a whole and aspects of the economy that help investors uncover investments insights, fundamental data, and economic patterns relevant to investment decision making.

Types of Federal Reserve reports

The types of Federal Reserve reports include key data such as current and historical statistical releases, survey data, spreadsheets, industrial manufacturing information, research on possible future economic scenarios, and emphasis on national banking research, records and analysis.

Federal Reserve reports may also provide pertinent information on banking legislation and policies that can have an impact on businesses and/or banks. Each Federal Reserve report contains information on different parts of the economy that specify recorded variables that can help guide an investment decision. For example Federal Reserve reports include numbers on economic activity, production, employment, cash flow which can tell a reader of the report what has happened to that aspect of the economy over time and/or for a particular time period.

This data can also be further analyzed via statistical software to establish additional economic relationships for investment purposes. Samples and examples of Federal Reserve reports to guide your investment decision are listed below:

• Industrial production and capacity utilization
• Consumer credit outstanding
• Aggregate reserves of depository institutions
• Economic analysis studies
• Banking practices involving customers
• Federal Reserve letters

Each Federal Reserve report covers an economic or banking topic that is relevant to investors because the information in the Federal Reserve reports may reveal trends, financial events, probabilities and forecasts that could serve as financial indicators. In other words and for example, the Federal Reserve report on industrial production in July through September 2009 indicates an increase of 2.8%.

The capacity utilization chart shows how much of the industrial sector’s productive ability is being used which may be important to investors interested in putting money in industry where manufacturing and capacity utilization have a pronounced affect on businesses. However, industrial production and capacity utilization reports may also demonstrate the overall economic climate which is also of relevance to investing.

How to read and understand Federal Reserve reports

Each U.S. Federal Reserve Bank report may have a different format, topic, and measurement methodology. For example, one report may be a written statement of a Federal Reserve requirement whereas another may be a spreadsheet of historical numbers. Understanding and reading Federal Reserve reports involves 1) knowing what you’re looking for, 2) reading the measurement technique used in the report if any, 3) assessing the usefulness and applicability of the report to a specific investment and 4) accurately interpreting the data in terms of the investment(s). This process may take some time and practice but is an essential aspect of investment research.

To illustrate the above steps, consider the example of Mr. Bacchus who is interested in investing in Bank of America but is not sure whether or not that is a good idea. As part of his investment research Mr. Bacchus decides to study Federal Reserve reports to help with his investment decision. He wants to find out 1) if the bank has good future earnings prospects, 2) what the business and regulatory climate in which the bank will operate is and 3) information on the banks customers in terms of cyclical economic trends.

To find out this items Mr. Bacchus visits the Surveys & Reports section of the Federal Reserve website in addition to the Banking information and regulation section. Within these sections he determines some reports are more useful than others and decides to read the latest Bank holding Performance Report for Bank of America Corporation. This report gives Mr. Bacchus a wealth of information in 27 pages with which he determines the data is mostly quantitative and includes financial statements, performance ratios, derivatives and off balance sheet transactions, loan data and more.

Mr. Bacchus has now achieved steps 1-3 and must now complete step 4 and accurately interpret the data. Mr. Bacchus decides to focus on Derivatives and Off-Balance Sheet Transactions. Bacchus discovers that off balance sheet loans made by the bank are the lowest level in 4 consecutive years, and interest rate swaps are the highest in 4 years.

From this information Mr. Bacchus determines Bank of America Corporation is heavily hedging against the performance of its non-swap revenue cash flow indicating the bank may fear inadequate performance of other banking products. Since off balance sheet loans are at a 4 year low this helps validate Mr. Bacchus’ belief and leads him to suspect the bank is pursuing a more conservative and defensive posture than aggressive growth approach.

Whether or not Mr. Bacchus’ interpretation is correct and how he applies his understanding of the report to his investment decision is Mr. Bacchus’ concern; what he has done however, is locate, obtain, distinguish and interpret a Federal Reserve report.

Tips For Getting The Most out of Financial Success

Financial success is a blessing that can lead to bigger and better things. If one merely has plenty of money and spends it without thinking, eventually that money will either vanish, decline in value, or never grow. Financial success can be utilized as a source for personal growth, community growth and professional growth. This article will offer techniques and tips that can amplify the magnitude of financial success and provide methods by which wealth can be used to accomplish more in life.

Avoid throwing money at problems

Throwing money at problems won't necessarily solve the problem or make it go away permanently it may merely subdue the problem temporarily. Using one's financial success to escape reality once in a while may be healthy, but to make a habit of it is potentially psychologically unsound. Facing one's problems can be beneficial with or without money and while it may not be desirable, one may end up being happier in the long run by doing so.

Reinvest to increase profit

Money not invested is money that misses an opportunity to grow. Whether it be 3% money market account or 5% Australian Certificate of Deposit or a real estate rental property, money not invested does nothing but succumb to the forces of inflation. Inflation depreciates money over time at approximately 2%/year and sometimes higher depending on where one lives.

Donate for community development and tax deductions

Not only are charitable contributions a great way to feel good about one's wealth but they are also tax deductible and consequently could actually cost a fraction of the amount of the original donation. Helping a community develop builds more revenue, more dreams, more product and potentially more happiness.

Wealthy billionaires such as Warren Buffett, Richard Branson, Paul Allen and William Gates don't just sit on their money, they do things with it. One may have a dream of helping to find the cure for cancer, introducing commerce to a small village in Africa, helping challenged and young people build lives etc. One can build one's own life and dreams by building the life of others.

Build a life

Financial empowerment can allow one to reach new goals and face new challenges. With financial success one can make more out of one's own life through the opportunities made possible through financial success. One could become more educated and learn to do something new, or pay for new exercise equipment to get in better shape. Money doesn't have to inspire laziness but instead a comfortable zest for living.

Enjoy the wealth

Unless one is ascetic, or attempting to accomplish a material free life, it is not necessary to not enjoy financial success within limits. Life is a gift to be enjoyed, if one has the means to enjoy, then making use of financial success to benefit from life may not be such a selfish pursuit.

Optimize financial positioning

Financially speaking, if one has a lot of money, that money can either be put to good use or neglected. If one wants to get the most out of one's money, asset management, prudent investing and cost controlling become important. That is to say, the are good ways to spend money and bad ways to manage money. Below are a few of the ways to optimize one's money:

• Utilize retirement savings vehicles, they are often tax deferred and can yield profit.
• Budget to develop financial discipline and save money.
• Tax plan by researching and studying tax code to maximize retained income.
• Develop an investment strategy to maximize investment returns.
• Never stop learning about money, financial regulations and commerce.

There are many more ways to optimize money management, but the above ideas can assist one get an idea about how to maximize one's wealth.

In summary, wealth and financial success are gift that can either be squandered or developed. To squander money may entail using money for unproductive purposes only. To develop money can include building one's life, helping a community grow and become richer, increasing wealth and managing money well. Financial success is a fantastic opportunity to facilitate many pursuits in life.